The richest Americans are commonly accused of not paying their federal income taxes. However, recent studies have shown that the richest Americans, which make up 1% of federal tax payers, are paying their taxes. More even, this rich section of the American population is paying 39.5% of all federal income tax; this according to a study released by the Tax Foundation.
Putting It in Numbers
To put the phenomenon into perspective, let us provide you with the numbers. According to the study released by the Tax Foundation, the richest Americans are paying $542.64 billion in federal taxes; this compared to a total of federal income tax of $1.37 trillion.
Other Findings Released in the Study
The recent study released by the Tax Foundation has brought more information to light regarding the American tax payer. Another interesting fact is that the richest Americans are paying almost double compared to the next bracket of top incomes; these are Americans that belong to the 2% – 5% of highest wage earners. The study also claims that the 1% of richest Americans pay almost four times more than the next wage bracket, which makes up 6 to 10%.
According to the study, the size of the groups does not truly affect the total amount of contributions to federal taxes. The 1% of richest Americans is the smallest group, yet a bigger group (the 6% to 10% income range) only pay 10.9% of income taxes.
The Effects of Various Taxes on the Groups
Naturally, the study has some implications for the federal tax payer, no matter which group they belong to. Below, you will find a summary of the contributing tax payer groups, accompanied by the amount of their income that goes to the tax man.
Richest Americans (1%)
The elite 1% of Americans have an effective average tax rate of 27.2%. Putting this in perspective, it means that more than a quarter of their earnings goes to the tax man. They are responsible for about 39.5% of all taxes paid.
Second Group (up to 5%)
For a second group of tax payers, of which it is estimated they make up the top 5% of earners. This group is dealing with a fiscal pressure amounting to less than a quarter of their income. This amounts to about 20.5% of the taxes paid.
Third Group (10%)
The top 10% earners in the United States give more than one-fifth of their earnings to the tax man; this comes down to a whopping 21.3%. Still, this burden is considerably less than the richest 1%.
Depending on who you ask, you will get different answers regarding the contributions of the richest 1% and higher earners. Even though it is easy for them to considered as being treated unfairly, it does work out in terms of living cost and assets when you look at some of the other wage brackets and their contributions.
The numbers also make good sense, because the richest 1% make astronomical amounts of money. So, even though there are less of these tax payers, it is no surprise their contributions surpass most of the American population.
We will wait and see how the new Trump Tax will impact the distribution of taxes collected from Americans.